December 1, 2011, 4:37 PM

Google could threaten Amazon and eBay with a new shipping service, an analyst says

A report today indicates that Google wants to launch its own Prime-like program.

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An e-commerce shipping service from Google Inc. would affect everyone in online retailing from Inc. down to the smallest web merchants, says Scot Wingo, CEO of ChannelAdvisor Corp., a company that helps retailers sell through online marketplaces.

Google isn’t talking about a report today in The Wall Street Journal that, quoting unnamed sources, says the search engine giant is talking with such major retailers as Macy’s Inc., OfficeMax Inc. and Gap Inc. about launching the service. Google would direct online shoppers to e-commerce operators that offer quick shipments of products for a low fee, the report says.  “At this point we are not commenting on rumor and speculation,” a Google spokesman says. The three retailers mentioned in the report either declined to talk about the report or offered no immediate comment today.

As described by the report, the Google service would at least roughly resemble two other shipping programs that offer shipping discounts and other incentives to paying members. Amazon Prime offers free two-day shipping for a $79 annual fee. So does ShopRunner, a growing service that launched in October 2010, and which also offers free returns, which Amazon does not.  Amazon is No. 1 in the Internet Retailer Top 500 Guide.

Wingo says the potential entry of Google into this area is hardly a surprise. “A Google Prime offering makes sense for two main reasons: Google wants to make its online shopping experience easier and because of the threat of Amazon’s extensive product offerings and marketplace supremacy,” he tells Internet Retailer. “Amazon Prime has most likely pulled traffic from the [Google] search engine as Prime users tend to begin product searches on Amazon. If Google is to offer a similar service, Amazon could have a new, viable competitor.”

EBay, however, could face trouble were Google to offer such a program and the online marketplace did not, Wingo says. “Similarly, has to decide which camp it’s in or come up with its own system, too,” he says. “Lastly, this could possibly be the end of ShopRunner unless retailers view it as a viable alternative.” Executives from ShopRunner and did not immediately return calls for comment.

As is ever the case when two giants clash, those underneath would have to decide whether to stay put or realign should Google launch the service. “Large retailers will need to figure out if partnering with Google is more or less evil than going it alone, partnering with Amazon or both,” Wingo says. “Small retailers will most likely be the big winners here since this could level the playing field by having some sort of Prime offering put together for them, which is essentially funded by Google Ad Words.” AdWords is Google’s paid search marketing system.

Eric Best, CEO of Mercent Corp., which helps retailers sell online through marketplaces and comparison shopping engines, notes that Google’s strengths are data processing and analysis, and in building markets around the data. “I expect the company will focus on becoming an arbiter of shopping intent and transactions, bringing shoppers, merchants, and carriers together, rather than building physical infrastructure or distribution,” he says. “Amazon is a guarantor of a positive overall shopping experience, not just a broker for e-commerce transactions.  This is a huge competitive advantage for Amazon, driving traffic growth—and one that Google must eventually solve directly or indirectly.”

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